Seven Week Long Employment Termination Hearing Results in Employer Paying $100,000 Punitive Damages

Posted by Johannes Schenk on September 28th, 2017 — Posted in Employment Law

Kelly v. Norsemont Mining Inc.,2013 BCSC 147[112], concerns a recent employment termination case in which $100,000.00 in punitive damages were awarded. This employer did itself no favour in handling the termination the way it did including running a seven week court trial. Imagine the costs on that one.

[112] The plaintiff claims that the manner of his dismissal justifies punitive damages and damages for mental distress. The following outlines considerations in a case for punitive damages.

[113] The object of punitive damages is to punish an employer in order to deter future unfair conduct. Punitive damages are not aimed at compensating the employee. These damages are exceptional and awarded only when the employer’s conduct is deserving of punishment because it is harsh, vindictive, reprehensible and malicious: Honda Canada v. Keays, 2008 SCC 39 (CanLII) at para. 68, [2008] 2 S.C.R. 362.

[114] The conduct complained of must be an actionable wrong. The actionable wrong does not need to be an independent tort: it can be found in a breach of a distinct and separate contractual provision, or in another duty such as a fiduciary obligation: Whiten v. Pilot Insurance Co., 2002 SCC 18 (CanLII) at para. 82, [2002] 1 S.C.R. 595. The requirement of an actionable wrong may be satisfied where the employer fails to meet his or her implied obligations of good faith and fair dealing in the manner of dismissal: Nishina v. Azuma Foods (Canada) Co., 2010 BCSC 502 (CanLII) at paras. 260-64.

[115] Examples of conduct justifying punitive damages include the employer knowingly fabricating allegations of serious misconduct or incompetence against an employee to support dismissal; the employer utilizing “hardball” tactics to intimidate the employee into withdrawing or settling his or her wrongful dismissal suit; or the employer implementing the dismissal in a manner designed to disparage the employee’s capabilities or honesty in the eyes of other employees or future employers: Geoffrey England et al, Employment Law in Canada, 4th ed., (Markham, Ontario: LexisNexis Canada Inc.), ch. 16 at 138-39.

[116] Punitive damages should only be awarded where there is a heightened need to punish the wrongdoer because compensatory damages (including damages for mental distress) are not enough to achieve the objectives of deterrence. While damages for mental distress and punitive damages serve different objectives (compensation and deterrence respectively), courts have repeatedly warned against the danger of double-compensation and double-punishment: Honda Canada at paras. 60 and 69. However, in an appropriate case both heads of damages are available: see for example Pate v. Galway-Cavendish (Township), 2011 ONCA 329 (CanLII), 342 D.L.R. (4th) 632.

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